This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the "Reprints" link at the bottom of any article.

March 7, 2013

Want to Retain Client Assets? Get to Know Your Clients’ Kids

An advisor called our marketing department recently for a recommendation on a list vendor. The marketing consultant asked the advisor, a gentleman in his 70s, why he wanted to buy a list. “Because my clients are dying, and their kids are taking the assets they inherit to their own advisors,” he said.

Retaining assets after a generational transfer is a big gap for most financial planning practices. Eighty-six percent of heirs in global family offices said they intend to fire the advisor used by their parents once they inherited their wealth, according to research conducted in 2009 by Rothstein Kass, an accounting and professional services firm. Younger generations are often unconvinced that their parents’ advisors are up to the task of managing their money.

The time to address generational wealth retention for your practice is well before those assets change hands. Getting to know your clients’ children better lets you offer planning assistance targeted at their current stage of life and be there as a trusted resource during the asset transition event, hopefully retaining the assets in the process.

The first step is to make sure clients understand that you want to get to know and work with their children. How you do that depends on the age of the children. For clients with children under age 30, a financial education meeting may be appropriate. For older clients with adult children who are closer to inheriting assets, the meeting may be more about communicating the clients’ financial decisions to their children. For high-net-worth families, a family governance meeting can help the family sustain substantial wealth over multiple generations.

Whether you focus on one of these approaches or use all three as appropriate for your clients, facilitating a family meeting is a valuable service and should be showcased in your marketing materials, specifically your practice brochure and website.

Meetings focused on communicating financial decisions can be the most sensitive for your clients and their heirs. Parents may be uncomfortable discussing their finances with their kids, particularly when it comes to disposition of their wealth when they die.

As an advisor, you need to help clients understand that their estate will at some point be left to these individuals, and the goal is to make the transfer process as simple as possible. The death of a loved one is one of the most difficult experiences people face in their lifetime, and it is definitely not the best time to deal with financial issues and decisions. Reassure the client that no specific financial or account information will be revealed without his or her direct consent.

For clients who are reluctant or even resistant to having a family meeting, you may need to ask poignant questions that bring a little reality to light.

How long do you think it will take for your children to figure out where your checking and savings accounts are so that they can access them to pay for your funeral?

How long do you think it will take for your children to figure out who I am and who your CPA and attorney are? Who will be watching your assets during that time?

The question of who should be invited to the meeting depends on clients’ stage of life and the complexity of their estate plan. For clients in good health and with simple estates, bringing just the children to the meeting is recommended. Clients with more elaborate estate plans may want to bring in other family members, executors and beneficiaries, and you may want to bring in the other professionals that participated in developing the plan.

Communication with family members should continue after the initial meeting. Add the children, executors, trustees and other relationships to your ongoing marketing campaigns, including newsletter distribution, invitations to educational seminars and workshops and any client appreciation events. This continually reinforces that you are a trusted professional who will be there to make sure the process goes smoothly when the inevitable happens. Hopefully, by that time, they are a full-fledged client and the chances of assets walking away from your practice will be drastically diminished. And you won’t have to buy a list to replace them.